Developments in the Vending Program in Colorado

by Kenneth Jernigan

For at least the last quarter of a century a number of the state rehabilitation agencies have had the nasty little habit of wanting to "split" profitable vending facilities. It works like this: If a particular vending location begins to be quite profitable (perhaps $25,000 or $30,000 a year or more--whatever arbitrary figure the ageAAncy chooses), the agency tries to diAvide it by putting in a second operator, each to get half of the profit. If that doesn't reduce the income sufficiently, a third operator may be brought in. It must be emphasized that the federal rehabilitation officials have no guideline or policy suggesting this practice, but it must also be emphasized that they do not discourage it. It is entirely a matter of whim with each state agency and with whatever federal rehabilitation official may be talking with you at the moment. Sometimes the federal officials take a hands-off attitude, and sometimes they covertly encourage the practice.

I remember arguing about the matter with the head of the division for the blind in the Federal Rehabilitation Administration when I first became director of the Iowa Commission for the Blind in the late 1950's. He said that it wasn't fair for one blind person to make $40,000 or $50,000 a year when there were many other blind people who had no jobs at all. He said that a person could live quite comfortably on $10,000 to $15,000 a year and that the entire program would be jeopardized if we permitted individual operators to make salaries higher than some of the state and federal employees in the buildings where the vending facilities were located.

I told him I thought blind people should have the same rewards for initiative and hard work as the sighted. I then suggested that if he believed blind persons with good incomes should split their earnings to share with the unemployed, perhaps he should begin by setting the example. "After all," I pointed out, "you make a pretty good salary, and you are blind. Let's begin with you." Somehow he didn't seem to think the situations were comparable. The National Federation of the Blind has always fought the idea of "splitting" vending facilities in order to reduce the incloe of operators. We have argued that program officials should spend their time and energy doing something else--like finding other new and profitable locations so that "splitting" would not be an issue. We have always felt that legislators and others will not resent the fact that blind persons are making a good living if the rehabilitation officials do not act defensive about it and plant the idea. Indeed, the fact that blind persons are earning their way and supporting themselves will be greeted with enthusiasm and pride if it is properly presented. Recently the Colorado rehabilitation agency attempted the splitting game, and as usual, the Federation opposed it. A vacancy occurred at the Terminal Annex of the U.S. Postal Service in Denver, and the agency proposed to divide it and give it to two operators, thus reducing the potential income of each. The Federation helped resist this maneuver, and in so doing, we made history. We took the matter to federal court, secured an injunction against the agency, and established the principle that blind vendors and the Committee of Blind Vendors have "standing" to sue in such cases. If the vending program is to be saved, the vendors and the Federation working together must do it. No one else either can or will. It must be emphasized that the Colorado "splitting" caper is, by no means, settled. As the documentation will show, we are only at the beginning, and a long road stretches ahead. There will have to be an administrative appeal, and then possibly arbitration and further court action. But we have surmounted the first hurdle. At least for the present, our injunction has blocked the "splitting" and assured the blind vendors of their appeal rights. Here are the pertinent letters and the Judge
's order:

National Federation of the Blind of Colorado
Denver, Colorado
8 April 1986

Stanley N. Boxer
Program Manager
Department of Social Services Business Enterprise Program
Division of Rehabilitation Services for the Blind
Denver, Colorado

Dear Mr. Boxer:

Your letter dated 3 April 1986 states that it is the intent of the State Licensing Agency to split the vending facility located at the Terminal Annex. This facility has, for the past six years, been operated by one blind vendor. My position in the Business Enterprise Program makes it clear that if I bid on this facility, which I intend to do, I will be in line to receive it. Your action significantly damages the vending opportunity in this location. By this letter, I am beginning the prescribed procedures of Appeal regarding the actions of the State Licensing Agency, and demand that this facility be places for bid as a single operator location. I further demand that this vending facility not be bid as a split location prior to the time that I have had the opportunity to grieve this action through the Administrative Review Process and the Federal arbitration available to me under the Randolph-Sheppard Act.

Very truly yours,

Richard Jack

Denver, Colorado
April 14, 1986

Dear Richard:

I am in receipt of your letter dated April 8, 1986.

As you are aware, it is the decision of the State Licensing Agency to give opportunity to more blind individuals by making the Terminal Annex two locations. This is a definite determination which we do not intend to change. In accordance with the rules and regulations, No. 9.209.1, this decision does not affect your status as an Operator and is not subject to appeal.

As of this writing, these locations have not been officially announced for oid. When they are announced for bid, we will follow the usual procedure in the awarding of these locations; and, of course, you are welcome to bid on either one of them. Not until all bids are received and a determination has been made regarding who the successful bidders are can I comment as to whether it will be you or another Operator in the Business Enterprise Program. If you should be the successful bidder of one of these locations, it would, by all indications, afford an increased economic opportunity for you.

Yours very truly,

Stanley N. Boxer
Program Manager
Department of Social Services Business Enterprise Program
Division of Rehabilitation Services for the Blind
Devner, Colorado

In The United States District
Court For The District Of Colorado

Civil Action No. 86-K-754

Don Hudson, et al.,

Plaintiffs, vs.
Stanley N. Boxer, et al.,

Defendants.

Memorandum Opinion and Order

Kane, J.

Plaintiffs filed this action on April 18, 1986 and moved at that time for a temporary Restraining Order. Because of the nature of the proceeding, the availability of defendants and their counsel and the opportunity to conduct a hearing before the date upon which it was alleged that irreparable injury would occur, I directed that notice be given and that the motion be treated as one for a preliminary injunction. At the hearing held on April 23, 1986 the parties, through counsel, agreed to this procedure. Additionally, on the hearing date, plaintiff's counsel filed an application for preliminary injunction which in effect duplicated the stipulation ruling. After listening to the sworn testimony of witnesses and the arguments of counsel and reviewing the exhibits admitted into evidence, I am ready to rule on the application. This is the first case filed in this circuit calling for application of the Randolph-Sheppard Act, 20 U.S.C. Section 107 et seq. with its 1974 amendments. There are very few cases outside of this circuit dealing with the statute as well. Given the exigencies inherent in a preliminary injunction proceeding and the paucity of available authority, I am reluctant, in fact diffident, to attempt to fill this lacuna in our jurisprudence. The Honorable Barrington D.
Parker, United States District Court Judge for the District of Columbia has provided a very helpful description of the Act in his memorandum opinion in Randolph-Sheppard Vendors of America v. Weinberger, 602 F.Supp. 1007, 1009 (1985):

"The Randolph-Sheppard Act was first enacted in 1936, and amended in 1954 and 1974. The Act was designed to provide employment opportunities to licensed blind persons and to give preference to blind operators of vending stands on federal property. S.Rep. No. 937, 93rd Cong., 2d Sess. 4 (1974) ('Senate Report'). Congress believed that 'the property of the Federal government should be more fully and freely utilized in expanding the vending stand program for the blind, and that no department or agency shoul be permitted to refuse suitable stand locations to this blind program except where such stand would clearly conflict with the proper functioning of the department or agency.' Id. at 7.

"This program is run under the auspices of state agencies for the blind, which are designated by the Secretary of Education. The state agencies bear a substantial responsibility for administering the blind vendor program. They seek permits for the establishment of vending facilities on federal property, 34 C.F.R. Section 395.16, 395.35, and issue operating licenses to blind vendors. 20 U.S.C. Section 107a(a)5; 34 C.F.R. Section 395.7(b). These vending facilities include 'automatic vending machines, cafeterias, snack bars, cart services, shelters, counters and other such appropriate auxiliary equipment' for the sale of a wide variety of items, 20 U.S.C. Section 107e(7), including 'newspapers, periodicals, confections, tobacco products, foods, beverages, and other articles or services dispensed automatically or manually.' Id. Section 107a(a)(5).
"

The statute differs significantly from other acts of Congress which establish various programs. I will go so far as to say, without implying any criticism, that it is the most unusual statute of this genre that I have read. In 1974 Congress amended the Act to provide that an aggrieved blind vendor may request a "full evidentiary hearing" before the state agency which supervises the program and, if dissatisfied "may file a complaint with the secretary of Education who shall convene a panel to arbitrate the dispute" in accordance with specific and detailed standards. Judicial review of the arbitrators' decision is authorized to proceed under the provisions of the Administrative Procedure Act, 5 U.S.C. Ch. 7 As stated by the Sixth Circuit Court of Appeals in Fillinger v. Cleveland Society for the Blind, 587 F.2d 336, 338 (1978), Merritt, C.J.:

"Congress' decision to provide administrative and arbitration remedies for aggrieved blind vendors clearly evidences a policy judgement that the federal courts should not be the tribunal of first resort for the resolution of such grievances. Rather congressional policy as reflected in the 1974 amendments is that blind vendors must exhaust their administrative remedies before seeking review in the district courts."

I hasten to observe that in the instant proceeding the plaintiffs do not seek review in this court, but an injunction to prevent the defendants from proceeding in a manner which would deprive them of the review processes provided for by the statute. Plaintiffs seek to enjoin defendants, their agents, the Business Enterprise Program, the State Licensing Agency, and any agent thereof from engaging in any aspect of the process of bidding for the operation of the Terminal Annex facility of the U.S. Postal Service in Denver, Colorado, as two separate vending locations. Additionally, plaintiffs seek a mandatory injunction ordering defendants to proceed with the administrative appellate process including plaintiffs' rights to a full evidentiary hearing and arbitration pursuant to the RandolphSheppard Act, 20 U.S.C. Section 107 et seq.

The complaint alleges that plaintiffs are blind vendors licensed pursuant to the Randolph-Sheppard Act to operate vending stands in public buildings. They are dissatisfied with the Business Enterprise Program's (BEP) recent decision to split the U.S. Postal Service Denver Terminal Annex into two separate vending locations. BEP is the state licensing agency for Colorado designated under the Act and required to implement the Act. Plaintiffs requested a full evidentiary hearing regarding BEP's decision. The request was denied.

In 1981, the BEP contracted with the postal service to operate a vending facility at the annex under the Act. The operating permit was approved by the Department of Education. Since 1981, Harold Powell, a licensed blind vendor, has been operating a vending facility at the annex building. Recently, Powell gave notice that he was going to retire. On 27 February 1986, at a meeting of the Committee for Blind Persons, the BEP announced that it was splitting the annex into two vending locations. The Committee was opposed this proposal. On 3 April 1986, defendant Boxer, manager of the BEP, notified the Committee that the annex would be split. Plaintiffs advised defendants of their intent to bid on the annex as a single location under the existing permit between the postal service and the BEP. This request was denied. Plaintiffs then requested administrative review and arbitration under the Act and Colorado Code of Regulations 9.206.1. This request was also denied.

Plaintiffs then brought this action seeking injunctive relief against defendants. According to plaintiffs, the state licensing agency intends to complete the bidding and selection process on or before 28 April 1986.

Standing

In Mountain States Legal Foundation v. Board of County Commissioners, 547 F. Supp. 121,123 (D. Colo. 1982), I stated: "There are established burdens placed on a litigant who seeks a temporary restraining order or a preliminary injunction. First, such a plaintiff must establish that it has standing to seek the relief requested."

In the instant case, plaintiffs seek injunctive relief against an administrative agency and an order mandating that the agency grant a hearing on the issue. Plaintiffs seek review and relief under the Administrative Procedure Act, 5 U.S.C. Section 701 et seq. Under the APA, plaintiffs "must establish that the agency action caused them . . . 'injury in fact' and that this injury is 'arguably within the zone of interests to be protected or regulated' by the statute that . . . plaintiff s claim the agency violated." Rapid Transit Advocates, Inc. v. Southern California R.T.D., 752 F.2d 373, 378 (9th Cir. 1985) (quoting Association of Data Processing Organizations, Inc. v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970)).

The injury in fact in this case is asserted by plaintiffs to be the loss of substantial income which will be caused by the imminent splitting of the annex. This injury may well be within the zone of interests protected by the RandolphSheppard Act. That act was passed with the express purpose of "providing blind persons with remunerative employment, enlarging the economic opportunities of the blind, and stimulating the blind ... to make themselves self supporting . . . ." 20 U.S.C. Section 107 (a).

Other Requirements for Preliminary Injunction

Next, plaintiffs must demonstrate: "(1) a substantial liklihood that they will eventually prevail on the merits; (2) that the threatened injury to them outweighs whatever damage the proposed injunction may cause to the opposing party; (3) that they will suffer irreparable injury unless the proposed injunction issues; and (4) that the injunction, if issued, would not be adverse to the public interest. Otero Savings and Loan Association v. Federal Reserve Bank, 665 F.2d 275, 278 (10th Cir. 1981); . . . ." Mountain Medical Equipment v. Heathdyne, Inc., 582 F. Supp. 846, 848 (D. Colo. 1984). Plaintiffs assert they should prevail on the merits because defendants have unlawfully denied them their right to a hearing. Under 20 U.S.C. Section 107d1(a): "Any blind licensee who is dissatisfied with any action arising from the operation or administration of the vending facility program may submit to a state licensing agency a request for a full evidentiary hearing, which shall be provided by such agency in accordance with section 107b(6) of this title." Section 107b(6) provides that the state licensing agency agrees "to provide to any blind licensee dissatisfied with any action arising from the operation or the administration of the vending facility program an opportunity for a fair hearing, and to agree to submit the grievances of any blind licensee not otherwise resolved by such hearing to arbitration as provided in section 107d-l of this title."

These statutes form the basis for plaintiffs' request for a mandatory injunction ordering defendants to give them a hearing.

Plaintiffs assert that the harm to them greatly outweighs any potential harm to defendants if the annex is operated under temporary permit as a single vending location until the administrative proceedings are concluded. Irreparable injury allegedly will consist of the loss of substantial income, attorney fees, court costs, loss of the opportunity to conduct an administrative appeal and arbitration, and loss of meaningful judicial review. Plaintiffs assert that the public interest would be served by a full and fair ajudication of the controversy before the annex is split.

Finally, plaintiffs contend that they have no legal remedy which would adequately protect their interests since the BEP has denied their requests for a hearing.

Defendants contend that the decision to split the Terminal Annex into two separate vending locations is a definate determination which they will not change. They assert that the decision does not affect plaintiffs' status as operators and hence plaintiffs are not entitled to a hearing or appeal. My reading of the Act and the admittedly limited review of the Congressional history and case decisions does not permit me to agree with defendants. The scope of the Act and the clear intent of the 1974 amendment do not suggest such a highly restrictive view. These plaintiffs have standing. They are in imminent danger of losing valuable opportunities to bid. More importantly, the statute gives these plaintiffs procedural rights, the exercise of which is clearly precluded by the defendants' conduct. 20 U.S.C. Section 107d-l(a) gives standing to any blind lecensee who is dissatisfied with any action arising from the operation or administration of the program; such standing is not limited to actions affecting their status as operators.

I find that plaintiffs' interest greatly outweighs any possible harm to defendants; that the threatened injury would be irreparable; that the public interest will be best served by strict adherence to the manifest intent of Congress and that no remedy at law exists which would preclude the issuance of an injunction. Accordingly, IT IS ORDERED that defendants, each of them, their agents, employees or anyone acting for or on their behalf or under their direction are hereby restrained and enjoined from letting or accepting bids or awarding bids pertaining to the Terminal Annex locations one and two until the plaintiffs have exhausted the remedies afforded to them by law or until plaintiffs and each of them voluntarily discontinue the exercise of their rights to administrative hearings and review, whichever event occurs first. This memorandum opinion and order shall not be construed in any manner as giving or attempting to give any indication that this court has any view or opinion at all on whether the Terminal Annex location should or should not be split onto two locations.

This injunction shall become effective immediately upon the plaintiffs posting a bond in the amount of $100.00 with the Clerk of the Court.